U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16662 / August 24, 2000
S.E.C. v. EquityAlert.Com, Inc., and Harmel S. Rayat, CIV 00-1469 PHX ROS (USDC Ariz.)
On August 8 the Honorable Roslyn Silver, U.S. District Judge, District of Arizona, issued final judgments of permanent injunction against EquityAlert.com, Inc. and Harmel S. Rayat. The defendants, who consented to the orders without admitting or denying the Commission's allegations, were enjoined from violating Section 17(b) of the Securities Act of 1933. Each defendant was ordered to pay a civil penalty of $20,000.
EquityAlert operates a website which offers a free subscription program which disseminates over one million daily e-mail messages to its subscribers, updating information on specific companies. Those updates included short promotional statements regarding approximately 18 issuers that had paid EquityAlert for publishing the statements. The complaint alleges that until May 30, 2000, there was no indication in the e-mails or on the website that the promotional statements had been paid for by the issuers. It is also alleged that from January 1, 2000, through February 15, 2000, EquityAlert disseminated daily press releases which compiled and referred to the promotional statements, claiming EquityAlert had provided its subscribers with "proprietary coverage" of these "top momentum" issuers. It is alleged that, like the website and e-mails, these releases failed to disclose the compensation EquityAlert received from the issuers whose securities were being described. This compensation, which amounted to more than $450,000, was EquityAlert's only source of revenue.